Microgrids are the topic du jour in grid modernization, but there is far more talk than action. Most of the activity today is happening at universities and military installations, but cities are poised to take a larger role in coming years, according to a recent presentation based on an upcoming report from GTM Research, North American Microgrids 2014: The Evolution of Localized Energy Optimization.

According to Magdalena Klemun, grid analyst with GTM Research, microgrids are currently undergoing a transition from mostly combined heat and power systems that are primarily installed for reliability concerns, to more sophisticated systems that integrate renewable energy and distribution networks assets coordinated and controlled within clear geographical boundaries.

“In the future, microgrids will have more market accessibility, more interoperability,” said Klemun.

In smart grid circles, microgrids are often widely defined. For a clearer picture, GTM Research has developed a Venn diagram to clarify what a microgrid is, while also acknowledging many of the concepts that encapsulate a microgrid but by themselves do not create a true microgrid.

The need and desire for more sophisticated microgrids is being driven by cheap natural gas, extreme weather and falling prices for distributed renewable energy. But there are significant challenges for microgrids if they are going to scale, especially in places where a mostly reliable grid is already in place. Standards and interconnection issues are one of the most significant barriers, with financing another major hurdle.

Even with the hurdles, microgrids are sprouting up across North America, with regional concentrations in California, Hawaii and the Northeast.

For more information, check out GTM Research’s upcoming report, North American Microgrids 2014: The Evolution of Localized Energy Optimization, due out in April. Contact [email protected] with any pre-release inquiries.

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Katherine Tweed writes on smart grid, demand response, energy efficiency and home networking for Greentech Media. Her freelance work has appeared in a range of media outlets, from Scientific American and FoxNews to Audubon Magazine and Men’s Health. She has a master’s degree in Science, Health and Environmental Reporting from New York University. Katherine never leaves her electronics in ...